Glossary · Reading the business
In short
An add-back is an expense on a company's financial statements that is non-recurring or discretionary and will not exist under new ownership. Identifying add-backs helps you see the true profit potential and cash flow of the business for a new owner.
Lenders will scrutinize seller-provided add-backs during underwriting to determine the business's true SDE or EBITDA. Common add-backs include owner's salary, discretionary expenses like personal travel, or one-time legal fees. Challenge any add-back that isn't clearly justifiable as non-recurring or discretionary for your ownership.
Defined by DealRoom.so SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
Pressure-test the numbers before you make an offer
Send us the asking price and the seller's cash flow — we'll show whether the deal services SBA debt and where the add-backs are likely to hold up.
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